AXON Stock Rally Faces Valuation Test: Growth vs. Price Tag

Axon Enterprise’s software segment is on fire—Q1-Q3 2025 revenues jumped 39.6% YoY, fueled by digital evidence management adoption and premium subscription upsells. The company just raised full-year guidance to $2.74B (31% YoY growth), betting on strong demand for TASER devices, VR training, and counter-drone tech.

Here’s the catch: AXON trades at 70.1X forward P/E, nearly 62% above the industry average of 43.4X. That’s a steep premium for a stock already down 16% over the past year while peers gained 13.9%.

For context, competitors like Teledyne (Digital Imaging +2.2% YoY) and Woodward (Industrial +10.6% YoY) are growing at half the pace but trading at cheaper valuations. The Street’s been skeptical too—earnings estimates have fallen 8.1% in the past month.

The question: Can AXON justify its valuation with sustained 30%+ growth, or is this a case of “priced for perfection”? Recurring revenue model is solid, but execution risk is real.